Applied Machinery Sales (AMS) filed Chapter 7 bankruptcy on Aug. 17 under the name Applied Machinery Rentals, LLC. The filing comes after owner Garth McGillewie died June 21, 2023 at the age of 61. According to a report on SNBC13.com, AMS was a distributor of construction equipment and was the first U.S. distributor for Italian-made Merlo telehandlers.
According to a blog post by David Mildenberg for Business North Carolina, a week before his death “Woodforest National Bank obtained a court order that put a receiver in charge of his Applied Machinery business. The Woodlands, Texas-based Woodforest, which is known for its branches in Walmart stores, has a $20 million claim against McGillewie’s estate, according to a filing in Union County Superior Court in Monroe.”
The blog goes on to say in addition a civil complaint was filed in early July by Stearns Bank against McGillewie’s wife, the executor of his estate. According to the article, the complaint “seeks repayment of more than $3.8 million. The complaint alleges a ‘fraudulent scheme’ that is described as ‘simple and effective.’ McGillewie obtained loans to finance the purchase of Merlo telehandlers, a sophisticated Italian hydraulic machine that is a combination tractor, forklift and crane boom.’”
Mildenberg writes that McGillewie then sold the telehandlers “out of trust” to third parties without the bank’s knowledge or without remitting the process, according to the filing. In turn, he used the money to “fund a lavish lifestyle of beach homes, a fleet of expensive marine vehicles, a private airplane and other luxuries for himself and family,” Mildenberg writes, quoting the filing.
According to the bankruptcy filing, “The Lenders assert that they hold first priority claims against the Bankruptcy Estate in the amount of $20,800,000.00 secured by all the assets of the Debtor. If true, the amount necessary to satisfy these liens is likely more than the value of the assets the liens encumber. The Trustee is in the process of investigating the security and amount of the debts owed to the Lenders.”
In addition to the Chapter 7 filing, Cole Hayes, the trustee for the estate of AMS, filed a motion of approval of auction marketing agreement and to sell free and clear of any interest in property. This includes several vehicles “drive by insiders of the Debtor, including by the Debtor’s deceased principal (Garth McGillewie), McGillewie’s adult children, McGillweie’s step daughter, and McGillewie’s son’s former girlfriend.”
The vehicles to be auctioned have a combined approximate balance owed over over $549,000 and include:
- 2022 Lamborghini Urus (approximately balance owed: $268,000)
- 2021 Porsche 911 Turbo S CPE (approximate balance owed: $163,000)
- 2022 Ford F-250 (approximate balance owed: $52,000)
- 2022 Ford F-250 (approximate balance owed: $47,700)
- 2019 Ford F-150 (approximate balance owed: $9,600)
- 2019 Ford F150 (approximate balance owed: $9,000)